It is $1 trillion and counting. While I am by no means a fiscal hawk, such a high debt level should concern all of us, given the looming spectre of interest rate hikes, which means the cost of servicing that massive debt has only one way to go - up.
Sadly, Justin Trudeau's promise to grow the economy 'from the heart outwards' is turning out to be just another of his empty rhetorical flourishes. With no discernible plan to manage and pay down that debt, we should all be worried.
Go to the 8:33 mark for the full story:
Lorne
ReplyDeleteOnly libertarians and other rightwing financial illiterates make an issue about deficits and government debt as part of their fear mongering appeal to get elected to "fix" the problem. Their are very few countries in the world today that can even think how to pay off their debts other than a general amnesty. just like endlessly growing the gdp it will eventually destroy itself when everything is so destabilized, change has to occur. Every conservative I know will swear up and down harper never ran a deficit despite history proven facts.I have great fun saying there is no deficit if they reduced hand outs to the oil industry till the books balance which changes the subject to how taxes are spent in reality which brings out the flaws in their arguments.
More important is what we got for a trillion dollars.
- Modern up to date infrastructure?
- State of the art health care on demand?
- free education on demand so every Canadian is working at a job that supports them?
- A power grid from east to west and 100% Canadian produced energy?
the list goes on and on but if we don"t have any of these then the money has been wasted. The role of the opposition is to question government spending therefore the waste is their fault too. Right now all we have is a babbling circus that only spends it"s time putting each other down and making fools of themselves while business skims off most of the wealth and taxes unapossed.
You make some excellent points here, Bill, but two things bother me about the current situation. Given the neoliberal bent of our current government, I get nervous when they discuss assets versus debt. Up until relatively recently, Trudeau was studying the possibility of selling off our major airports as a revenue-raising scheme, and don't forget that here in Ontario that is precisely what Kathleen Wynne did in selling off 60% of Hydro One to raise revenue rather than raising taxes, something that seems verboten in our fraught times.
DeleteSecond is the entire issue of taxation. Team Trudeau, outside of a little tinkering with the small-business taxation rate, has shown no stomach for a return progressive taxation, something that is bad needed if we are to get a handle on deficits as well as funding much-needed programs such as pharmacare.
There are some leading economists such as James Galbraith who convincingly argue that the Keynesian formula has little relevance in the age of globalism but the logic of paying down debt in a booming economy still seems sound.
ReplyDeleteI don't know if our economy is being destabilized by the United States which is funding all of its foreign wars and the recent tax cut for the rich out of foreign borrowings, debt. The Republicans have shown, again, that their earnest concern about debt and deficits can be measured by the length of a Democratic presidency. Once restored to power, especially a unitary Republican government, a taste for profligacy returns.
I found it wryly amusing that Trudeau/Morneau rely on the IMF to defend the federal debt and yet reject the wisdom of the IMF, the World Bank, Davos and other groups about the failure of neoliberal globalism. That sounds like politics by cherry-picking so popular in the US.
What I found most interesting about the newscast you posted,Lorne, came later on with the report about how the Liberal Party's numbers have tanked. Wynne, it seems, has dragged down Trudeau while Trudeau, especially after his really stupid stunts in India, has dragged down the Liberal Party. A 24 per cent swing in favour of the Conservatives in Ontario in just one year? I was saddened to see the Tories leading again in BC but I blame that on Trudeau's betrayal of coastal British Columbians - the very voters who enabled him to pocket 17 seats in 2015.
Maybe with his and his party's fortunes heading for the gutter, Trudeau will find new courage to revisit his disgraceful and, for some of us, unforgivable betrayal on electoral reform. That may be Canada's last best hope with Scheer's Tories resurgent. Back when Trudeau's popularity was soaring he put his party ahead of the country and broke his promise on electoral reform. We can only hope that he can now change his mind - again.
I suppose all things are possible when one's political skin is on the line, Mound. For example, today in Ontario Wynne made anew spending announcement on free daycare. The problem here is that here growing desperation is palpable, and it will simply be more ammunition for the demagogue of the month, Doug Ford, who will remind voters she is trying to bribe them with their own money.
DeleteAs for deficits, I agree that good times should see some prudent management so that the bad times will allow for more expenditures. However, given the debasement of contemporary politics, anything approaching balanced and sensible public-policy-making seems but a naive hope.
I think Bill would support a form of Solon's Seisachtheia. A casting off (cancellation) of debts that present a mortal blockage to the economy.
ReplyDeleteI got half way through a 400 page book called debt; the first 5000 years and until the protistent church came along almost every society practised some form of debt forgiveness on a festival day usually. It is only in the last few hundred years that the concept of non forgivable debt has taken over with the end results playing out today. In the last few decades we have combined legalized loan sharking a.k.a. credit cards, very few standards in giving credit and the ability of banks to create new money out of thin air every time they underwrite a loan.
ReplyDeletecan you imagine going to the bank with large personal debts, no job security and not being legally wed and getting even a $40,000 car loan let alone a half or three quarter of a million dollar mortgage with no money down 40 years ago? you would have been laughed out onto the street. I'm surprised you don't have to sign your life away today.
Government debt is backed by the taxpayer and is much less risky. Of course the problem with any sort of debt forgiveness now would be world wide economic collapse unlike a thousand years ago when they opened up the steam cave from time to time and released pressure.
I agree, Bill, the global economy is so interlocked that debt forgiveness would demand that it be dismantled or, perhaps from some other cause or event, shattered. One of my frequent criticisms of globalization is that it is mortally dependent on a relatively high degree of stability across its chains of production and consumption. With the stressors confronting the community of nations this century - climate change and other ecological threats, resource exhaustion and depletion and social upheaval, that 1980s level of stability may be difficult to maintain. What then? We may be compelled to adopt new models: economic, political, social unlike what we've accepted for generations, in some cases centuries. That could provide an opportunity to liberate ourselves, individually and societally, from burdensome and unproductive debt.
ReplyDeleteI've always thought of debt as two pronged -- consumer debt and invested debt. Invested debt eventually produces income. Consumer debt simply adds up on the credit card. The question we should ask is, "Which kind of debt are we mired in?"
ReplyDeleteAn excellent question, Owen. While few would argue about investments in infrastructure, education, etc. one wonders if the distinction is clear in our 'leaders'' minds.
DeleteThis is what Harper failed to grasp with his 2009 "recovery" budget. He threw money at people, often individuals who thought to put a new deck on the cottage. That had very little impact as stimulus because most us were planning on doing those renos anyway out of our own pockets.
DeleteHarper could have but failed to invest that money in major infrastructure projects - bridges, highways, the electricity grid - that would have generated returns to offset the tax burden his borrowings would have to be borne by the public.
What troubles me about Trudeau's ill-conceived infrastructure problem is the overly generous terms of his public-private partnership deals. The private sector puts up the majority of the money but they reap and even larger share of the return on that investment and the government even promises to indemnify them for the financial risk should the venture sour. That may not be graft but it smells like it.
Any government plan that promises to ensure that investors are fully protected smells to high heaven in my book, Mound.
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